Trump announces massive aid to US businesses and households

The Trump administration and the US Central Bank redoubled their efforts on Tuesday to prevent the world's largest economy from being swept away by the coronavirus pandemic, by announcing massive aid to provide immediate financial assistance to the most vulnerable businesses and households. affected, the day after the speech of the American president calling on the Americans to limit their movements.

The US Secretary of the Treasury, "Steven Mnuchin, is working with the Senate and the House of Representatives on a bold and very important (aid) program," said Donald Trump at a press conference.

After being slow to react, the White House host boasted that this plan would be unprecedented. "I don't think I've seen anything similar before," he said.

Steven Mnuchin did not reveal the amount of this aid plan while the American press mentioned some 850 billion dollars. But he unveiled some concrete measures. "We plan to send checks to the Americans immediately," he said. "That is to say in the next two weeks," he added. A measure already taken by the Bush administration during the 2008 crisis.

Mr. Mnuchin stressed the importance of injecting liquidity without delay to help not only households but also small businesses most vulnerable to the crisis.

"We also have the possibility of guaranteeing loans to crucial industries such as air transport and hotels," said the minister.

"Worse" only after September 11

According to him, the airlines, which have had to suspend numerous air routes to stem the spread of the coronavirus, are "in a worse situation" than after the September 11 attacks.

The Trump administration is working "to get this legislation through quickly in the Senate," also said Steven Mnuchin, who is working to get approval from Republicans and Democrats.

Shortly before, the US Central Bank announced that it would provide credit facilities for businesses and households.

Among the concrete measures, the Fed proposes to support car or real estate loans and to grant loans to businesses.

The objective is to prevent difficulties in repaying loans which would accelerate the economic damage caused by the coronavirus.

Read >> Why central banks seem helpless in the face of coronavirus

Risk of recession

For the first time on Monday, the President admitted that the American economy was in danger of falling into recession. Many economists believe that it is already contracting.

We have to go back to February 2009 to find an ambitious recovery plan. The Obama administration, which was fighting against the financial crisis, had announced 787 billion aid over three years to support consumption and real estate. This plan consisted for a third of tax breaks and the rest of public expenditure. The Republicans had succeeded in reducing its magnitude in the name of controlling the deficits.

"The short-term debt market has been under severe strain in recent days, as businesses and households face greater uncertainty in the face of the coronavirus epidemic," said the Fed on Tuesday.

If the 2008-2009 recession had a financial origin - the collapse of "subprimes", these mortgage loans granted lightly by American banks - the current crisis comes from an external shock affecting the real economy and is spreading as countries become more caulked.

Reassured scholarships

The Fed's announcements and the prospect of an economic stimulus plan seemed to reassure the market. Around 4.30 p.m. GMT, the Dow Jones Industrial Average gained 3.78% after temporarily taking more than 5%.

The Nasdaq climbed 5.15% and the S&P 500 by 4.93%.

The $ 850 billion stimulus package would be in addition to another package of about $ 100 billion that aims to provide paid sick leave to workers directly affected by the economic impact of the coronavirus.

This other aid plan, adopted Friday evening by the House of Representatives with a Democratic majority, has not yet been adopted in the Senate, with a Republican majority.

"Now is the time to take action boldly and put aside the political divides," the Senate Republican majority leader Mitch McConnell said in a statement on Tuesday.

With AFP

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